Your Retirement Is More Important Than Your Kids’ College Fund

Jason Demland

September 4, 2018

Psalm 127:3-5 New King James Version (NKJV)

3Behold, children are a heritage from the Lord, 
The fruit of the womb is the reward.
4Like arrows in the hand of a warrior, 
So are the children of one’s youth. 
5Happy is the man who has his quiver full of them;
They shall not be ashamed,
But shall speak with their enemies in the gate. 

The Scripture is true. I’ve got four daughters. My quiver is filling up. I love my children more than I could have ever imagined I could love any sticky-fingered, loud, small human. I want them to have everything I had and everything that I didn’t. I have to fight the urge to buy them anything they ask for. If they ask real nice and sweet-like, it’s almost impossible to say no. I want what is best for my kids. I want them to be healthy, happy, and successful. That’s why I think education is incredibly important.

I’ve had plenty of talks with folks about the problems with college and the education system in today’s world. If you’ve ever heard me talk about it there’s a good chance that you think I’m against college, because I’ll complain about the problems I have with people’s perception of post-secondary education. There’s a weird romanticism about it. Prestige is conflated with pragmatism all too often. It’s talked about like it’s separated from the rest of life and living, like going to college the four years after high school is like joining a crazy utopian cult that is the pinnacle of life. If I have to hear a parent about prioritizing their kid getting the real college “experience” I might barf. The general education of most colleges is messed up and extremely politicized; how can a student be allowed to graduate without taking any form of economics but be required to have 5 other humanities classes? Is 18th century literature more important to a well-rounded education than learning who Adam Smith is?

I could go on and on with my qualms about college, but I think it’s extremely important that you give your kids the opportunity to go. No, college isn’t for everyone and there are plenty of noble and lucrative career paths that don’t require it, but college is where your kids can learn a lot of cool stuff about science, technology, the arts, history, medicine, law, finance, and more that will help them to become successful in life. Since their biggest wealth-building tool is their income, giving your kids the means to increase their income by providing college is a great goal.

College is expensive, and you need to start saving sooner rather than later if you want to have any money to help your kids out with. You need to have a plan to start doing this to do it well, but don’t forget about all of your other plans on the way to doing this. Your retirement is a whole heck of a lot more expensive than college for your kids, even if you’re going to try to put 8 of them through school and you need to save for that before getting distracted by the (approximately) one million other things you have to do just because you’re an adult. 

There’s a method to my instructions. It involves the power of focusing on one thing at a time in order to accomplish stuff. I wrote about that last week.  Most importantly I urge people to first avoid risk by having the proper insurance in place (life, accident, health, disability) and a little bit of cash saved for emergencies. Then I tell people to get out of debt and then save a full 3 to 6 months worth of expenses for emergencies. Next, it’s important to save for your retirement! After you’re stowing away 15% of your income for retirement can you start thinking about saving for your kids’ college funds.

Saving for your retirement is more important than saving for kids’ college for several reasons. Have you ever flown on an airplane? You’re supposed to put your own mask on before putting the kids’ on. Because if you’re unconscious you’re no good to your kid. It’s similar with saving for retirement. You want to sacrifice for your kids, I understand that, but don’t sacrifice in a really stupid way. If you delay saving for retirement because you need to make sure your precious little ones have a world-class education, because of the time-value of money you could be robbing yourself of hundreds of thousands of dollars, which could leave you in a really tough spot when you’re unable to work in your older years. You may actually become dependent on the very kids you were determined to give everything to and a drain on their finances. Make sure you’re saving for retirement first, at least 15% of your income, before you start saving for your kids college. When you’re at that step, do some research on the various savings options you have and get going strong! College is a wonderful thing and can be a great blessing, but put it in its proper place.